Amazon Offers to Buy Stake in Flipkart

Share

According to CNBC TV18 in India, citing sources, Amazon's offer is for 60 per cent of the Indian online store.

Last month, after nearly a year of speculation, Walmart reportedly reached an agreement to purchase a controlling interest in Indian e-commerce platform Flipkart in a deal valued at somewhere between $10 and $12 billion.

Flipkart has also been negotiating a deal with Walmart, the $500-billion multinational retail chain which is ranked as the world's largest company by revenue, and has been looking to establish a footprint in India. Flipkart had then announced that it had cash in excess of $4 billion on its balance sheet.

The acquisition of Flipkart by Walmart will be an extension of its domestic battle with arch rival Amazon, whose expansion is the biggest threat to the retail icon. Flipkart, which controls a 39 per cent share of India's ecommerce market, compared with Amazon's 30 per cent, ...

Amazon's bid may complicate matters for Walmart, which has also been trying to buy a stake in Flipkart. Rival Amazon is making a last ditch effort to avert a formidable combine of its competitors. Softbank, Flipkart's main stakeholder, however, had some apprehensions over a deal with Amazon.

More news: Intel (NASDAQ:INTC) Shares Bought by Gilman Hill Asset Management LLC
More news: Facebook adds 'sleep mode' parental control feature on Messenger Kids
More news: Justice Department investigating Huawei for violating U.S. sanctions on Iran

Walmart plans to retain Flipkart's current structure (including company's current CEO Kalyan Krishnamurthy) while Amazon has made no such promises and wants to sign a non-compete deal with Flipkart's founders.

Walmart is expected to gain three to four seats on Flipkart's ten-member board.

Sources said while Walmart is still in talks to buy shares from Flipkart and its investors, the deal will include the purchase of primary and secondary shares. Walmart is said to have had the backing of Flipkart's majority shareholders who believe a merger with Amazon would not go past the Competition Commission of India, besides facing a backlash from different sections of the trading community. The Amazon bid, the person said, is pegged at $22-23 billion. Public and private initiatives to increase broadband internet access in India, as well as 7.2% GDP growth, have made the market even more desirable.

In an interview with TOI just a few days ago, Son said, "We are involved in discussions with key shareholders and the management".

Share